Just one problem. What's the risk that we never get to Disneyland because of the risk that I incorrectly assess the risk that may or may not be involved in the risk of death from infection caused by jamming a fork through my own eye just so I don't have to read any more of this crap?!
Auditing is ghastly.
It's theory. All theory. Picky, niggly, ridiculously in depth theory. Theory that you cannot begin to grasp unless you have actually audited. Personally, I have not. Now, they do mention this fact in the course. Not in the course syllabus, mind you. Nor in a note about the course pre-requisites. No. Nothing so simple. They mention it at the very end of the summary of the very last module for the course. You will not understand this class until you have auditing experience. Thaaaaanks!
Auditing involves a series of standards, assertions, procedures, objectives, tests, and communications.
Generally accepted auditing standards. One general, three examination, and four reporting standards. They are involved and detailed. And they should not be confused with assurance standards, which have three very subtle differences but are otherwise virtually identical.
Management assertions. Different assertions apply to balance sheet accounts, income statement accounts, and note disclosures. Accounts are linked together in various cycles. Each cycle includes primary assertions. Assertions must be substantiated with a procedure. General procedures are: analysis, enquiry, inspection, observation, computation, and confirmation. Different procedures are used to test different assertions. Specific procedures are not so much provided as made up as you go along.
Internal control objectives. Each corresponding with a management assertion. These fall in categories and levels. General controls. General IT controls. Application controls. Input, processing, and output controls as subsets of application controls. Three subsets of input controls, one of which is entitled "input controls". Eleven controls in this category. Tests of controls. Reliance on controls. Weaknesses in control. Manipulation of control. Different duties which must be segregated in different account cycles for effective control.
Communication. The auditor's report. Engagement letter. Management representation letter. Derivative communications. Two other letters I'm forgetting. Communication with predecessor auditors. Does this client even need an audit? Three paragraph standard report. Introduction, scope, opinion. Qualifications in "except for" wording. Where do extra paragraphs go? What should they say? What should be in each paragraph? Audit report addressed to shareholders. Dated. Signed. What is the date? When do you issue qualified, unqualified, adverse, or denial? When do you resign from an engagement?
Law. Liability. Ethics. Structure of the CEPROC. Computer auditing. EDP. EDI. Through vs. around computer. Computer assisted auditing techniques and when to use them. Sampling. Statistical vs. non-statistical sampling. How and when to sample. Upper and lower error bounds. Unadjusted vs. adjusted error bounds. Interpretation of results. Stratification of samples. Types of independence. Audit risk model. Types of risk: alpha, beta, sampling, detection, audit, business, information, inherent, control, incorrect acceptance, incorrect rejection. Risk on top of risk. Risk of assessing risk incorrectly.
Risk of assessing risk incorrectly? You can't be serious. What happens if you assess the risk of assessing the risk incorrectly ... incorrectly? Hmmmm?
Auditing is ghastly.
But this is why designated accountants get paid the big bucks. 'Cause everyone else would rather just drown themselves than even think about this crap. And I personally am contemplating ripping out my own liver and beating myself to death with it, just so I can have something else to do. I bet the magazines at hospital emergency rooms are more interesting, and they probably mention nothing about the audit risk model; not even once.
Exam on March 13. Can't wait for it to be over. As long as I pass, it's good. I just don't want to have to repeat this class.
Dear lord, I hope my next class is better. But I dread it, too. Theory courses are problematic for me. And this next class has "theory" built right into the title, so that just can't be good.
So ... What's the risk that I might make an error in assessing the risk that in a few years, my son may or may not be emotionally scarred for life at the hands of a giant rat who insists on hugging him forcefully in the middle of a theme park while "It's a Small World After All" plays on a pipe organ over a tacky PA system?